The taxation rules in Mutual Funds are different for equity funds and debt funds. So, the rules of taxation for both of them are as follows.
Equity Funds:
Equity Schemes | Holding Period | Tax Rate |
Long-Term Capital Gains (LTCG) | More than 1 Year | 10% (with no indexation)* |
Short-Term Capital Gains (STCG) | Less than or Equal to a Year | 15% |
Tax on Distributed Dividend | 10%*# |
*Gains up to INR 1 lakh are free of tax. Tax at 10% applies to gains above INR 1 lakh. Earlier rate was 0% cost calculated as closing price on Jan 31, 2018. #Dividend tax of 10% + Surcharge 12% + Cess 4% =11.648% Health & Education Cess of 4% introduced. Earlier, education Cess was 3%
Debt Funds:
Debt Schemes | Holding Period | Tax Rate |
Long-Term Capital Gains (LTCG) | More than 3 Years | 20% after indexation |
Short-Term Capital Gains (STCG) | Less than or Equal to 3 Years | Personal Income Tax rate |
Tax on Distributed Dividend | 25%# |
#Dividend tax at 25% + Surcharge 12% + Cess 4% = 29.12% Health & Education Cess of 4% introduced. Earlier education Cess was 3%
To know more, read here: https://www.fincash.com/l/mutual-fund-taxation-india
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